UPDATE 1-Darden warns on second quarter as promotions miss mark
* Forecasts second-quarter profit below Wall Street view
* Sees same-restaurant sales declines at "big three" chains
* Shares fall 9.3 percent (Adds 2013 forecasts, executive comment, byline; updates shares)
By Lisa Baertlein
Dec 4 (Reuters) - Darden Restaurants Inc warned on Tuesday that earnings for the latest quarter would miss expectations after unsuccessful promotions led to a decline in sales at its Olive Garden, Red Lobster and LongHorn Steakhouse chains.
Shares in Orlando, Florida-based Darden tumbled 9.3 percent to $47.57 in early trading on the New York Stock Exchange.
Darden's promotions did not "resonate with financially stretched consumers as well as newer promotions from competitors", Clarence Otis, Darden's chairman and chief executive, said in a statement.
"Our disappointing results for the quarter point to the need for bolder changes in the promotional approach at our three large brands," said Otis, who added that the company is "retooling" such offers for the balance of the year.
Darden now expects net earnings from continuing operations of 25 cents to 26 cents per share for the second quarter ended Nov. 25. That includes a reduction of 5 cents per share related to its purchase of Yard House USA Inc and a hit of 1 cent per share from Hurricane Sandy.
Analysts, on average, expected fiscal second-quarter earnings, excluding items, of 47 cents per share, according to Thomson Reuters I/B/E/S.
Darden expects same-restaurant sales to be down 3.2 percent at Olive Garden, off 2.7 percent at Red Lobster and down 0.8 percent at LongHorn Steakhouse for the second quarter.
Based on the recent results and planned changes to its promotions, "we are being cautious about our sales and earnings forecast for the full year", Otis said.
It lowered its full-year target for combined same-store sales at Olive Garden, Red Lobster and LongHorn Steakhouse. It now expects those combined sales to be flat to down 1 percent, compared with its prior call for a rise of 1 to 2 percent.
Darden set its forecast for fiscal 2013 net earnings per share from continuing operations at $3.29 to $3.49. That includes 8 cents to 10 cents in charges related to the Yard House purchase.
The company said its full-year targets also reflected the potential impact of recent negative media coverage about its moving some workers to part-time from full-time schedules in an effort to hold down the cost of federal healthcare reforms.
Darden is scheduled to release final second-quarter results on Dec. 20. (Reporting by Lisa Baertlein in Los Angeles; Editing by Dale Hudson)
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